Total European hotel transaction volume fell by 69 per cent in the year of the pandemic following a record high the previous year when €27 billion-worth of hotel deals were struck.
According to the annual European Hotel Transactions 2020, published this week by HVS and its brokerage and investment services division HVS Hodges Ward Elliott, hotel transaction volume reached €8.5 billion last year.
Single-asset transactions accounted for 65 per cent of all deals, totalling €5.5 billion, while portfolio deals represented 35 per cent at €3 billion.
Before the pandemic, 2020 was set for record transaction levels.
The year started strongly with transactions in January and February up 2.5 per cent on 2019 with volumes of €2.7 billion and a 1.8 per cent rise in the average sale prices per room to €170,000.
Subsequent lockdowns across Europe coupled with limited availability of debt financing pushed transaction levels down by 66 per cent with only one type of buyer, high-net-worth individuals, investing in larger volumes of hotels than in the previous year.
A total of 201 European hotels and more than 44,000 rooms exchanged owners in 2020.
The UK retained its position at the top of the transaction table, posting the highest level of investment volume across Europe with a total of €2.1 billion (£1.8 billion).
Some €1.6 billion-worth (£1.4 billion) of UK transactions were London-based.
Germany maintained second place in the transaction rankings, with total hotel investment volume for the year reaching €1.7 billion.
Munich was its most favoured city with €501 million-worth of transactions.
Looking ahead, HVS expects that the second half of 2021 will begin to show signs of transaction volume recovery as economic support programmes fall away and loans come up for refinancing, but the bulk of the recovery is likely to happen in 2022 in parallel with rising hotel revenue streams.
“The full impact of the pandemic is expected to affect the transaction market later this year with an increase in distressed debt and opportunistic investment ahead of a gradual market recovery.
“However, the majority of volume recovery is expected in 2022 as immunisation programmes are completed and the leisure and corporate travel sectors start to recover,” commented report author Shaffer Patrick, associate, HVS Hodges Ward Elliott, London.
Take a look at the full report here.